Explanation About Money

Explanation About Money

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06.15

Money in traditional economics is defined as any means of exchange that can be generally accepted. Medium of exchange that can be any object that can be accepted by everyone in the community in the process of exchange of goods and services. In modern economics, money is defined as something that is available and is generally accepted as payment for the purchase of goods and services as well as other valuable property and for the payment hutang. A Few experts also mention the function of money as a means of delaying payment.

The existence of money to provide alternative transactions easier than barter more complex, inefficient, and less suitable for use in the modern economic system because it requires people who have the same desire to make an exchange and also the difficulty in determining value. Efficiency is obtained by using the money in the end will encourage trade and the division of labor which in turn increases productivity and prosperity.

At first in Indonesia, the money in this case kartal- money issued by the government of the Republic of Indonesia.
However, since the promulgation of Law No. 13 1968 Article 26, paragraph 1, the right of the government to print money revoked. The government then set the central bank, Bank Indonesia, as the only institution entitled to create currency. The right to create money was called Oktroi rights.

Money as we know it today has undergone a long development process. At first, people are not familiar with the exchange because each person trying to fulfill kebutuhannnya own effort. Humans hunt if he is hungry, make their own clothes from simple ingredients, look for fruits for their own consumption; in short, what is obtained that is being used to meet their needs. The subsequent development of human mengahadapkan on the fact that what is produced is not enough to memenuhui all needs. To obtain items that can not be produced by themselves, they are looking for people who want to exchange goods owned by other goods needed by him. Consequently comes sistem'barter'yaitu exchanged goods with goods. But in the end, a lot of the perceived difficulties with this system. Among these are difficult to find people who have the desired item and also want to exchange its goods and difficulties in obtaining goods can be exchanged with each other to exchange value equal or nearly equal in value. To overcome this, start arise thoughts to use certain objects to be used as a medium of exchange. The objects are defined as a medium of exchange that is objects received by the public (Generally Accepted) objects selected high value (difficult to obtain or have a magical and mystical value), or objects that are the primary needs of everyday ; for example salt by the Romans used as a medium of exchange and as a means of payment of wages. The influence of the Romans are still visible to this day: the British call a salary wages derived from the Latin word meaning salarium salt.

Goods that are considered beautiful and valuable, as this shell, once used as a medium of exchange before humans found the coin.

Although the exchange of existing tools, difficulties in the exchange remain. Difficulties were partly due to objects that have not been used as a medium of exchange so that the fractional determination of value for money, storage (storage), and transport (transportation) becomes difficult to do as well as the difficulty arises due to the lack of durability of such objects so easily destroyed or not durable. Then came what is called the coin. Metal chosen as a medium of exchange because it has a high value so that the rage, durable and not easily broken, easily broken down without reducing the value, and easily moveable. Metals are used as a medium of exchange because it meets these requirements is gold and silver. Gold and silver coins are also referred to as the money (full bodied money). That is, the intrinsic value (the value of the material) is equal to the nominal value (values listed in the currency). At that time, everyone is entitled to forge money, merge, sell or use it, and have the right not limited to storing coins. Along with economic development, there was a presumption trouble when the development of exchange that must be served with a coin increases while the amount of precious metals (gold and silver) is very limited. The use of coins is also difficult to deal large amounts of paper money that was created at first banknotes in circulation is evidence of ownership of gold and silver as a tool / intermediary to conduct transactions. In other words, banknotes in circulation at the time the money is guaranteed 100% by gold or silver that is stored in the goldsmith or silver and can be redeemed at any time full guarantee. In further developments, people no longer use gold (directly) as a means of exchange. Instead, they make 'paper-proof' as a medium of exchange.

The original function [edit | edit source]

The original function of money, there are three, namely as a medium of exchange, a unit of account, and as a store of value.

Money serves as a medium of exchange or a medium of exchange that can facilitate the exchange. People who will not need to exchange the exchange of goods, but simply use money as a medium of exchange. Difficulties by way of barter exchanges can be overcome with the exchange of money.

Money also serves as the unit of account (unit of account) because the money can be used to show the value of various goods / services that are bought and sold, showing the amount of wealth, and calculate the size of the loan. Money is also used to determine the price of goods / services (price indicating device). As the tool unit of account, money plays a role to facilitate the exchange.

In addition, money serves as a store of value (exchange) because it can be used to transfer purchasing power from the present to the future. When a seller is currently receiving a sum of money as payment for goods and services sold, so he can save money is to be used to buy goods and services in the future.

Function derivatives

In addition to the foregoing, the money also has another function called as a function of the derivative. Derivative function, among others:

Money as legal tender

Human need for goods and services that are growing and diverse can not be met by way of exchange or barter. In order to facilitate in obtaining the necessary goods and services, people just need a means of payment that can be accepted by all people, namely money.

Money as a means of repayment of debt

Money can be used to measure the payment in the future.

Money as a wealth hoarders

Most people usually do not spend all their money for consumption purposes. There are some money set aside and saved for future purposes.

Money as a wealth transfer

Someone who is about to move from one place to another can be transferred wealth in the form of land and building homes into cash by selling it. In the new place he can buy a new house using the money from the sale of the old house.

Money as a driver of economic activity

If the value of money stable people are more passionate in making investments. With the investment, economic activity will increase.